Some comments from Derek Archer on the federal minimum wage increase...

On Tuesday, July 24th, the first installment of the Fair Minimum Wage Act of 2007 went into effect. This law increased the federal minimum wage from $5.15 to $5.85 an hour and will continue to increase it over the next two years. This may look good at the first glance, but there are many hidden costs found in the minimum wage. Please allow me to explain myself.

A minimum wage law creates an artificial floor for businesses by limiting their resources. When faced with a raised minimum wage, businesses must make a hard choice. They must either raise the prices of their products and services or they must fire some of their employees in order to pay the wages of the rest of their employees.

If businesses, on the one hand, raise prices, people living on fixed incomes will be hurt. These people often depend on a Social Security or disability check every month. If businesses, on the other hand, choose to fire some of their employees instead, inexperienced and handicapped people will suffer most. Many jobs will be lost and some may even be outsourced to cheaper foreign labor.

An estimate made by the National Federation of Independent Businesses argues that 217,000 jobs will be destroyed if the federal minimum wage is increased to $6.65 per hour. The federal minimum wage is scheduled to reach $6.55 per hour next summer and $7.25 per hour the summer after that.

Some of the primary forces behind minimum wage laws are the unions. Unions stand to gain higher wages for their own workers when minimum-wage workers are making more money. In essence, minimum wage laws take economic opportunities away from the poor and needy to subsidize the greedy.

In this video, one union boss oversees a picket line of homeless and transients the union hired to do work the union's members won't do themselves. When a reporter tries to ask the picketers questions, they say that they will be fired if they talked to him. The union boss remains tight lipped too.

Miami, Fla., October 2004: "When it comes to picketing, the Carpenters' Union has discovered it's smart to outsource. ...That's part of the strategy behind a flurry of protests outside a few Brickell Avenue towers in recent months. But complaints have filtered to Miami police regarding abusive language and use of the homeless to hold signs. "Maybe some are homeless, but not the majority," Kuzmik said.

Indianapolis, Ind., May 2005: "The labor group hires demonstrators--including many homeless and unemployed people who have little or no connection to the construction trades--to picket various projects, carrying giant fake rats on sticks or even wearing rat costumes."

Columbus, Ohio, August 2006: "Ohio and Vicinity Regional Council of Carpenters is upset that some contractors and property-management companies don't pay carpenters the $22.50-an-hour standard wage and, perhaps, don't pay for health insurance or pensions. So the union is picketing these companies. Well, sort of. The union itself is not doing the protesting. Rather, it has hired more than 160 nonunion people -- the jobless and the homeless -- to do its picketing."

While Democrats want to increase the Department of Labor’s budget by nearly $1 billion, they are leaving the little agency that oversees union transparency out. Why? Because union bosses are call the shots on Capital Hill and they don't like that little agency.

The agency currently receives $47.7 million and President Bush wanted to increase the budget to $56 million. Instead, Democrats have set funding at $45.7 million.

Example One: Only the agencies unions can use to bully employers, such as those tasked with employer accountability and worker safety, are getting the increased funds. The singular subject on which Dem’s are exercising fiscal restraint is the agency that, from 2001 to 2006, “investigated more than 2,000 criminal cases that secured some 650 indictments of union officials who had engaged in everything from embezzlement to extortionate picketing. The [agency] has also implemented a 2004 rule requiring unions to file expanded disclosure reports, obliging them for the first time to disclose how much dues money they spend on politics and union salaries.”

Example Two: The Hill wrote yesterday, “In an op-ed e-mailed to reporters, Chao criticized Congress for being ‘all for boosting the Securities and Exchange Commission’s [SEC] budget so it can ride herd on businesses.’ In contrast, she said, Congress had singled out the one federal entity charged with protecting union members from corruption for budget cuts.”

Example Three: Democrats are succumbing to pressure to renege on promises to keep the free trade agreements with Panama and Peru alive. Charlie Rangel has been persuaded to visit the two countries and tell them that if they want the agreements to pass (i.e., Democratic support of the agreements.) to make their labor laws more union-friendly.

Predictably, unions take a “Who? Me?” approach, raised eyebrows and all. “The statistics are cooked,” associate general counsel to the AFL-CIO, Deborah Greenfield, said to The Hill. She said DoL double-counts convictions (If one union boss is convicted of 5 different crimes, the agency counts five convictions, not one.).

Greenfield also told The Hill that an AFI-CIO study on union bosses says that less than four-one hundredths (4/100 or .04) of 1 percent of union officials are guilty of crimes against their unions."

The Office of Labor-Management Standards (OLMS) is a division of the U.S. Department of Labor and stands as a champion of justice. One of its primary roles is to investigate and report the fiscal documents of labor organizations. Perhaps it should come as no great surprise then that this is the only government office from which the Democratic Congress is seeking to cut funds.

Secretary of Labor Elaine Chao wrote an op-ed on this topic. Read it here.

The Office believes that union workers have a right to know how their union dues are spent—especially if such dues are being embezzled. It may be important to some to know that the NEA gave about $65 million to Jesse Jackson’s Rainbow PUSH Coalition and other liberal organizations—organizations that do not relate to education at all.

Furthermore, the OLMS prosecutes embezzlement and corruption within unions. For example, an OLMS investigation of Alan Raines, former Financial Secretary of Steelworkers Local 1358, accused him of embezzling over $274,000 in union funds and of bank fraud. This is one example of many where the OLMS has curbed corruption (click here for criminal prosecutions and here for accounts of civil violations).

Unlike some arguably useless government agencies, the OLMS deserves our support. If funding must be cut from a government agency, Congress should know what cuts to make rather than being blown about by the winds of political expediency. For example, which of the following is more important: the Migratory Bird Conservation Commission or the OLMS? Your Representatives in the U.S. House need to know where you stand on this issue.

Justice Scalia said that the only thing that makes this complicated is the fact that the WEA chooses to commingle funds that doesn’t belong to it. The union tried to claim it was actually the WEA’s money. Laughter broke out in the court. I was there.

The Seattle Times, hardly a part of the right-wing conspiracy the WEA has used as a scapegoat for years, called its practice a money-laundering scheme.

Leer concluded:

When students get into trouble, I respect them more if they own up to their mistakes and take responsibility for their actions. The WEA will yet again face monetary penalties for its law-breaking. Who will pay? Every hardworking teacher, while the union bosses continue to make excuses and collect huge salaries. How sad.